Short Reads

Brand owners beware: Commission tough on cross-border sales restrictions

Brand owners beware: Commission tough on cross-border sales restricti

Brand owners beware: Commission tough on cross-border sales restrictions

01.08.2019 NL law

The European Commission recently imposed a EUR 6.2 million fine on Hello Kitty owner Sanrio for preventing its licensees from selling licensed merchandising products across the entire EEA. Sanrio is the second licensor (after Nike) to be fined for imposing territorial sales restrictions on its non-exclusive licensees for licensed merchandise. A third investigation into allegedly similar practices by Universal Studios is ongoing. The case confirms the Commission's determination to tackle these practices, regardless of type or form.

This should represent a clear call for companies to double-check their distribution and licensing agreements for cross-border sales restrictions, and take any necessary action.

According to the Commission's press release, Sanrio's non-exclusive licensing agreements infringed EU competition rules by containing clauses i) explicitly prohibiting out-of-territory sales by licensees, ii) committing licensees to refer orders for out-of-territory sales to Sanrio, and iii) limiting the languages used on the merchandising products. Sanrio kept tabs on the licensees' compliance with these territorial restrictions, and made clear the consequences of non-compliance, by conducting audits and refusing to renew contracts with non-abiding licensees. In line with the Commission's practice rewarding cooperation outside cartel cases [see our January 2018 Newsletter], Sanrio obtained a 40% fine reduction for having cooperated beyond its legal obligation to do so.

The fine on Sanrio fits into the Commission's increased focus on vertical restraints, initiated by its 2017 e-commerce sector report [see our June 2017 Newsletter]. Fines have already been imposed for (online and offline) resale price maintenance and territorial restrictions. National competition authorities, such as the Dutch ACM, the French Autorité de la Concurrence and the German Bundeskartellamt, are also stepping up the pace in the quest against vertical restrictions.

The review of the Vertical Block Exemption Regulation (VBER), due to expire in 2022, could therefore not have come at a better time. Not only is a uniform approach on how to enforce vertical restrictions among EU competition authorities long overdue, more guidance and clarity would also benefit companies when concluding vertical agreements. According to the evaluation roadmap, the VBER's review should be ready by the second quarter of next year. It will therefore soon be clearer whether good things indeed come to those who wait.

 

This article was published in the Competition Newsletter of August 2019. Other articles in this newsletter:

 

Team

Related news

07.02.2020 BE law
Het finale Belgische ‘nationaal energie- en klimaatplan’ en de Belgische langetermijnstrategie: het geduld van de Commissie op de proef gesteld?

Articles - Op 31 december 2019 diende België, nog net op tijd, zijn definitieve nationaal energie- en klimaatplan (NEKP) in bij de Commissie. Het staat nu al vast dat het Belgische NEKP niet op applaus zal worden onthaald door de Commissie. Verder laat ook de Belgische langetermijnstrategie op zich wachten. Wat zijn de gevolgen?

Read more

06.02.2020 NL law
CDC/Kemira: Amsterdam Court of Appeal applies European principle of effectiveness to limitation periods

Short Reads - In a private enforcement case brought by CDC against Kemira, the Amsterdam Court of Appeal applies the European principle of effectiveness and rules that claims are not time-barred under Spanish, Finnish and Swedish law. With reference to the Cogeco judgment of the ECJ, the Court considers that claimants must be able to await the outcome of any administrative appeal against an infringement decision, even in relation to respondents who themselves have not filed appeals against the infringement decision.

Read more

06.02.2020 NL law
Pay-for-delay: brightened lines between object and effect restrictions

Short Reads - In its first pay-for-delay case, the ECJ has clarified the criteria determining whether settlement agreements between a patent holder of a pharmaceutical product and a generic manufacturer may have as their object or effect to restrict EU competition law. The judgment confirms the General Court’s earlier rulings in Lundbeck and Servier (see our October 2016 and December 2018 newsletters) in which it was held that pay-for-delay agreements (in these cases) constituted a restriction ‘by object’.

Read more

06.02.2020 NL law
Consumers and Sustainability: 2020 competition enforcement buzzwords

Short Reads - The ACM will include the effects of mergers on labour conditions in its review. It will also investigate excessive pricing of prescription drugs. As well as these topics, the ACM has designated the digital economy and energy transition as its 2020 focus areas. Companies can therefore expect increased enforcement to protect online consumers, and active probing of algorithms.

Read more

06.02.2020 NL law
The ACM may cast the net wide in cartel investigations

Short Reads - Companies beware: the ACM may not need to specify the scope of its investigation into suspected cartel infringements in as much detail as expected. On 14 January 2020, the Dutch Trade and Industry Appeals Tribunal upheld the ACM’s appeal against judgments of the Rotterdam District Court, which had quashed cartel fines imposed on cold storage operators. The operators had argued that the ACM was time-barred from pursuing a case against them, because the ACM had not suspended the prescription period by beginning investigative actions specifically related to the alleged infringements.

Read more

06.02.2020 NL law
Den Bosch Court of Appeal revives damages claims in Dutch prestressing steel litigation

Short Reads - On 28 January 2020, the Court of Appeal of Den Bosch issued a ruling in the Dutch prestressing steel litigation. In its ruling, the Court of Appeal overturned a 2016 judgment of the District Court of Limburg, in which it was held that civil damages claims brought by Deutsche Bahn were time-barred under German law (see our January 2017 newsletter).

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring